Thursday, September 08, 2011

Before Obama's "grand bargain" with Boehner imploded, many progressives were appalled to learn that Obama had put (gradually) raising the Medicare retirement age to 67 on the table. Swampland suggests that Democrats on the supercommittee charged with proposing a deficit reduction package are doing the same:

Democratic staffers on the Ways and Means Committee on Wednesday
submitted a list of potential savings, including some $500 billion from
Medicare through tweaks like raising the eligibility age to 67 from 65.
The bipartisan task forces of months past have identified a menu of
potential savings the supercommittee can mix and match from to reach its
goal.

The actual Ways and Means memo, however, reads more like a brief against this option -- and a slap at Obama for proposing it. It also perhaps hints at the germ of a messy bargain, or rather a kind of subtrigger to preserve these alleged savings, which may be presumed dear to GOP hearts (my emphasis below):

Raising the Medicare eligibility age [by two months per year through 2027, to 67]would be a radical departure from current policy and is only possible if the ACA is retained. If ACA were subsequently repealed or otherwise substantially changed, this policy would result in a significant increase in the number of near-elderly uninsured persons. Even assuming current law with respect to the ACA, some people over age 65 who are subject to the new policy may become uninsured if they no longer have access to employer sponsored insurance (ESI) and cannot afford coverage through the exchanges. Furthermore, this policy does nothing to control costs, it simply shifts substantial costs from Medicare to other parts of government and to private and public employers. More specifically, this policy would increase costs for employers as more near-elderly retain employer-sponsored insurance. It will increase Medicaid costs, as more low-income near-elderly would remain on Medicaid for longer and others who would become eligible for coverage through the exchange may be eligible for the new Medicaid expansion through the ACA. It would also increase government costs for subsidies in the exchanges, because some people who would otherwise receive Medicare will remain in the exchanges for longer. It would increase premiums in the exchanges – raising costs for other individuals and raising government spending for the tax credits – as the risk pool gets a little worse when the population shifts to be slightly older and more costly. Similarly, this policy may also slightly increase Medicare per capita costs as the population shifts to be slightly older than it is today by excluding the youngest and generally healthiest beneficiaries. This policy idea was floated by the President near the end of the debt ceiling debate.

Despite all the excellent reasons not to seek Medicare "savings" by these means, the bit I boldfaced does suggest a rationale for entertaining it, if it really floats Republican boats. Any agreement to phase in the higher retirement age would presumably be conditioned on the Affordable Care Act going into effect and nullified if the ACA is voided or repealed. That might reduce the ferocity with which Republicans seek to repeal the ACA. It might also give pause to the Supreme Court justices who are receptive to arguments that the ACA is unconstitutional, since their reasoning is as plainly shaped by ideology and political interest as that of their colleagues in elective office.

As Ezra Klein pointed out weeks ago, it seems ridiculous to propose shifting seniors aged 65-67 from the tried-and-tested Medicare to the still-notional healthcare exchanges. But predicating scored "savings" on the proper functioning of those exchanges could perhaps increase their odds of coming into existence. Perhaps Obama's thought ran along these lines.

I'm assuming, too, that Democrats on the supercommittee will not entertain any changes to Medicare and Social Security unless Republicans put new revenues - perhaps pitifully paltry ones -- on the table.